It is a puzzle as to why the inflation in India is so high. The markets showed their displeasure on friday when it tanked because of high inflation numbers ( also bad forecast from Infosys).
This high an inflation rate is really not something which other countries are facing with. All other countries of the world are facing the same increase in commodity prices, oil surges etc. However, if you see the other emerging markets, their inflation rates are not that high.
In this what comes to mind is that this is most probably an issue of supply constraint more than anything else.The RBI monetory policy is expected to keep on increasing the cost of credit which unfortunately will keep on creating issues of infrastructure constraints which will again not help in controlling inflation.
There has to be concerted effort by the government to keep the focus on removing supply side constraints- let it be food ( imagine the amount of food we waste with the FCI - all of the wheat that we buy is not kept properly and wastes and rots away!) , or infrastructure .
A high figure of 9.3% when the expected inflation was at 8% by the RBI is a real cause for concern for the Indian Economy and for us.
Imagine what the real rate of interest is today- because the government is not able to reign in inflation ( they are busy making money and noises around the lokpal bill). We need more Anna hazares to wake up the government and move it to action!
Till that time- ensure that you have your money in safe havens like gold and silver or in debt funds... ( except long term money)
Here are some earlier posts on similiar topics
http://simplefinancialsense.blogspot.com/2010/08/we-are-living-in-delationary-savings.html
http://simplefinancialsense.blogspot.com/2010/03/inflation-where-are-we-headed.html
http://simplefinancialsense.blogspot.com/2010/07/titans-gold-harvest-scheme.html
Happy Investing
( dont forget to subscribe using the links on the right)
This high an inflation rate is really not something which other countries are facing with. All other countries of the world are facing the same increase in commodity prices, oil surges etc. However, if you see the other emerging markets, their inflation rates are not that high.
In this what comes to mind is that this is most probably an issue of supply constraint more than anything else.The RBI monetory policy is expected to keep on increasing the cost of credit which unfortunately will keep on creating issues of infrastructure constraints which will again not help in controlling inflation.
There has to be concerted effort by the government to keep the focus on removing supply side constraints- let it be food ( imagine the amount of food we waste with the FCI - all of the wheat that we buy is not kept properly and wastes and rots away!) , or infrastructure .
A high figure of 9.3% when the expected inflation was at 8% by the RBI is a real cause for concern for the Indian Economy and for us.
Imagine what the real rate of interest is today- because the government is not able to reign in inflation ( they are busy making money and noises around the lokpal bill). We need more Anna hazares to wake up the government and move it to action!
Till that time- ensure that you have your money in safe havens like gold and silver or in debt funds... ( except long term money)
Here are some earlier posts on similiar topics
http://simplefinancialsense.blogspot.com/2010/08/we-are-living-in-delationary-savings.html
http://simplefinancialsense.blogspot.com/2010/03/inflation-where-are-we-headed.html
http://simplefinancialsense.blogspot.com/2010/07/titans-gold-harvest-scheme.html
Happy Investing
( dont forget to subscribe using the links on the right)
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